Public Bill Committee

[Mrs Linda Riordanin the Chair]

Clause 16  - Charges schemes

Thomas Docherty: I beg to move amendment 135, in clause16, page47, line36,at end insert—
(i) make provision for section [Billing information: affordability].

Linda Riordan: With this it will be convenient to discuss the following:
New clause 29—Billing information: affordability—
‘Any company providing water services to a residential household must include on its bills—
(a) details of any tariffs provided by that company;
(b) a recommendation of the lowest possible tariff for each residential household; and
(c) information regarding eligibility criteria and how to make an application for assistance under Water Sure.’.

Water companies are required to provide information regarding all tariffs and all affordability schemes alongside customer water bills.
New clause 30—National Affordability Scheme—
‘(1) The Secretary of State must, by order, introduce a National Affordability Scheme for water.
(2) The National Affordability Scheme must include an eligibility criteria, determined by the Secretary of State, in consultation with—
(a) the Water Services Regulation Authority; and
(b) the Consumer Council for Water.
(3) An order under this section—
(a) shall be made by statutory instrument, and
(b) may not be made unless a draft of the order has been laid before and approved by resolution of each House of Parliament.’.

The Secretary of State is required to bring forward a National Affordability Scheme, with an eligibility criteria prescribed by the Secretary of State in the form of a statutory instrument, subject to the approval of both Houses.

Thomas Docherty: Thank you, Mrs Riordan, it is a pleasure to serve under your chairmanship today.
The debate on this group of proposals is relatively straightforward. We had a good opening session on Thursday afternoon on some of the more technical aspects of the Bill. It was a useful exchange, but today we go to the heart of the political debate on the Bill. In the two and a half years since the Bill emerged as a White Paper, I have been critical not so much of the contents as of what it does not do—it does not address the cost of living crisis facing households up and down the country.
I shall speak to each of the new clauses in turn. It is understandable that they have been grouped together, but they seek to do slightly different things. For those Members who are not as familiar as you, Mrs Riordan, with WaterSure, perhaps I should begin by explaining what it is. The WaterSure scheme was set up by the Labour Government to provide assistance to households that had high usage requirements but a low income. The criteria are straightforward: a person has to have a meter in their home and either a certain number of children under the age of 19 or someone with a registered disability or illness that requires high water usage in the household. People also have to be on certain benefits. We might touch on changes to the criteria later in the discussion.
I hope the Minister agrees that last Tuesday’s session, when we heard evidence from the Consumer Council for Water, was genuinely useful. Interestingly, approximately 72,000 households in England take up the scheme, and a further 20,000 households in Wales take up the equivalent scheme there—as hon. Members know, the Welsh have a slightly different structure but do fundamentally the same thing. Unfortunately, as the Consumer Council for Water pointed out in its evidence—hon. Members can read it in columns 25 and 26 of Hansard—that is only a fraction of those who are eligible to receive assistance. Perhaps the Minister has the most up-to-date breakdown of figures for households per water company, but it is frightening just how few in each water company area receive that assistance.
That so few receive assistance is not just because the scope of the assistance is rightly narrowly drawn; it is because, as we heard in Tuesday’s session, most households simply do not know that the assistance is there for them in the first place. Dame Yve Buckland’s points on Tuesday were useful so I shall quote them for the Minister. She stated that the Consumer Council for Water
“engaged actively with the industry to get the scheme rebranded, to make it simple, make the paperwork simpler and to promote it. Since 2007, we have seen a 350% increase in the take-up of WaterSure...But arguably, it is still a drop in the ocean”.––[Official Report, Water Public Bill Committee, 3 December 2013; c. 25.]
Pardon her dreadful pun. New clause 29 is a direct result of the compelling evidence we heard on Tuesday from the Consumer Council for Water.
The Opposition recognise that the Government, building on the previous Government’s work, are seeking to address that shortfall of understanding. However, we argue that, rather than getting into a complicated debate about how to target the information better—the Minister will recall that the Select Committee on Environment, Food and Rural Affairs considered that when we examined the draft Bill—and rather than coming up with a complicated new IT system to target information at households who could benefit, the simplest and most practical way of getting information to people is to include it on their bills.
In new clause 29, the Opposition propose that bills sent to households include simple information saying: “This is what WaterSure is, these are the criteria that you would have to meet to qualify and, if you believe that you qualify, this is who to contact to apply for it.” In the spirit we have shown so far in Committee, we hope the Minister accepts that the new clause is not a political one. It is an attempt to reach out to his constituents and constituents up and down the country who should be eligible and who are not currently receiving that important help.
I shall quickly give the Minister figures from 2010-11 to indicate the scale of the challenge we face. If the Minister has the most up-to-date figures, I would be grateful if he shared them with the Committee. In the South West Water region—the Committee includes a number of south-west Members—only 9,850 households receive WaterSure help. I am sure the Minister agrees that a lot more households in Devon and Cornwall should be receiving WaterSure help and are entitled to receive such assistance.

Anne-Marie Morris: Is the shadow Minister aware that the take-up of WaterSure is higher in the south-west than anywhere else in the country?

Thomas Docherty: The hon. Lady is absolutely right that the south-west has the highest take-up in England, but take-up for the scheme in Wales is slightly higher. We probably agree that that is because of the populace the schemes deal with, but she will also agree that the take-up in Devon and Cornwall, as Dame Yve Buckland has said, is still a “drop in the ocean” compared with the number of households that would be eligible.

Sheryll Murray: Is the hon. Gentleman aware that the water company in the south-west had a drive to make consumers aware of the WaterSure scheme about 18 months ago? The company has already taken the initiative. What difference would his proposal make?

Thomas Docherty: I am happy to address the hon. Lady’s question. As the Consumer Council for Water has said, there has been a significant increase—up to 350%—in the past six years, but take-up is still far too low. The best estimate is that only about a third of those who are eligible are taking up the scheme. If the Minister is not minded to accept new clause 29 today—I will be disappointed if he is unable to break the civil service lock—will he spell out what further steps the Government will take? It is unacceptable that fewer than 10,000 households in the south-west have taken up the scheme, but the hon. Member for Newton Abbot is right that the take-up rate in the south-west is the highest rate in England. I shall quote other figures: in your area of Yorkshire Water, Mrs Riordan, 3,853 households are taking up the scheme. Fewer than 4,000 households in the whole of Yorkshire is simply far too low.
The Minister has to accept that, as the Consumer Council for Water has said, although progress has been made, there is a lot more to be done. My proposal is a practical step—a common-sense approach—and its beauty is its simplicity. Every customer is sent a bill. There is no additional cost: there is no cost to the taxpayer or to the water companies. The billing information has to go out anyway, so why not provide information about eligibility? The hon. Member for South East Cornwall would accept that our biggest problem is that many of our constituents simply do not know that the scheme exists. We have to do more to promote the scheme, particularly in this time of hardship.

Matthew Offord: The hon. Gentleman says consumers do not already know that the scheme exists. However, I understand that water companies voluntarily include information with household bills on how to apply for assistance under the WaterSure scheme.

Thomas Docherty: The problem is that it is not as straightforward as the hon. Gentleman has been informed. It is a bit more patchy than that, and there has not been a standardisation. I refer to the evidence we heard on Tuesday from the Consumer Council for Water, which, after all, is the independent champion of consumers. It says that we simply must do more to promote the scheme. For far too long, we have been hung up about whether we can improve take-up through targeting or through a more complex measure. The beauty of my proposal is its simplicity: every water company would send out the information.
The one time that our constituents think about the cost of water is when they get their bill. Many hon. Members have experienced that. We usually think about the cost of things when we get the bills. Many of us receive our bills online, but we are not even prescribing whether or not the information should go out electronically; we simply say that, when the bill is sent out, it should include that information. The Committee will agree that it is simply unacceptable that two thirds of people who are eligible for help do not receive it.
New clause 30 would introduce a national affordability scheme for water. We had a lively debate on Second Reading on social tariffs. I hope to encourage more contributions on them from Members on both sides of the Committee. Last Tuesday, the Consumer Council for Water said:
“One in eight customers says they cannot afford their bill”.––[Official Report, Water Public Bill Committee, 3 December 2013; c. 23.]
That is 12%—an astonishing figure. The Consumer Council for Water highlighted that water bills, although not as high as energy bills when we look at them in isolation, add to the overall cost of living. If we add the cost of water to the rising cost of food and energy, and to the ongoing cost of running a car, the problem is compounded. The written briefing to the Committee from Citizens Advice stated that almost as many people who are struggling to pay their water bills come through its doors as people who are struggling to pay their gas and electricity bills.
The industry has not done enough. The Committee has heard Opposition Members repeatedly highlight the fact that only three water companies currently offer social tariff schemes. As we know, social tariffs were introduced in the Flood and Water Management Act 2010 because the water industry told the House of Commons that water companies were absolutely committed to doing more. The industry said that, rather than having a standardised scheme, it would introduce comprehensive schemes if we gave it the opportunity.
Three and a half years after the House of Commons voted for social tariffs, they have been introduced by only three water companies. The business plans were published last week, but only a further dozen of the water companies have any plans at all to bring in social tariffs in the near future. Even those proposed social tariffs do not go far enough.

John Cryer: What does my hon. Friend make of the industry’s response last Tuesday during the evidence session? The water companies seemed to be saying, “The fact that only three water companies have introduced social tariffs is purely because of the morass of Government regulation and interference.” I do not find that particularly convincing.

Thomas Docherty: My hon. Friend is entirely right. The response from Mr Wesley was reprehensible. He seemed to blame everybody but the water companies—he shamefully blamed the regulator, Ministers and customers. My hon. Friend is absolutely right to highlight that performance. It is fair to say that, as a lobbyist for the water industry, Mr Wesley did not do a particularly good job. Judging by the look on the face of Cathryn Ross, the chief executive of Ofwat, I suspect she did not think it was acceptable for the water lobbyist to blame the regulator for the fact that the water companies had made so little progress.
It is not just that only three water companies have introduced schemes; the schemes themselves are less than satisfactory. In my new role as shadow Minister, I met the chief executive of Affinity Water a couple of weeks ago. He said that when Affinity eventually gets round to introducing its social tariff scheme—at best, we are looking at 2015-16—only 80,000 households will receive any type of support, out of something like 1.2 million households. Let us not forget that that water company covers a large part of the south-east region, one of the most expensive areas to live in, and the area with the highest cost of living. That is simply unacceptable—it is not satisfactory at all. The implementation of the scheme has been risible. The breadth of households that will be captured by the social tariffs is very poor. It is clear that, left to their own devices, water companies will not do enough to help their customers. Enough is enough. We simply cannot go on with a laissez-faire attitude. We cannot keep saying, “If we give them a bit more time, the water companies will get there.”
That is why the Opposition propose new clause 30, which does three things to improve the situation for hard-pressed families up and down the country. It ends the postcode lottery by ensuring that every water company has a social tariff scheme, and addresses the criteria for the social tariff scheme. We propose a national affordability scheme to replace the ad hoc social tariff. Before the Minister comes up with reasons why the Government will not help hard-pressed families, let me be clear that we are talking about national criteria delivered locally. We are absolutely clear that we are not going to get into a situation in which customers in the north-east of England are subsidising customers in the south-east and vice versa. The proposal is for nationally standardised criteria delivered locally.

Dan Rogerson: I am grateful to the hon. Gentleman for setting out some of the thinking behind his national affordability scheme proposal, because there were a number of questions in my mind about how it would be constituted. I believe he implies that the scheme applies within water company areas, but would it be funded out of general taxation, or would it be funded through bills, which is how the current social tariff is funded?

Thomas Docherty: I think the Minister has probably read the briefs that his civil servants helpfully provided—[Interruption.] If the hon. Member for Enfield, Southgate wants to stop chuntering and make a contribution, I will happily give way to him.
 Several hon. Members  rose—

Thomas Docherty: I will take about four interventions at once if Government Members can get their lines straight. I will happily give way to the hon. Member for Enfield, Southgate, who is chuntering.
 Several hon. Members  rose—

Thomas Docherty: If the hon. Gentleman—the Parliamentary Private Secretary—wants to make a contribution, I will give way, but he does not, so I will take an intervention from the hon. Member for South East Cornwall.

Sheryll Murray: The hon. Gentleman is making a really powerful speech, but perhaps he would like to answer the question.

Thomas Docherty: If I can avoid the sledging, I will happily answer the question. [ Interruption. ] Again, I cannot understand why the hon. Member for Enfield, Southgate continues to sledge from the Back Benches, and to do it badly. If he has something that he wants to say, he is more than welcome to intervene. If not, I would like to make some progress and answer the hon. Lady’s question.
Social tariffs work through funds from the water companies. Opposition Members believe it is totally unacceptable that water companies made such excess profits last year. We would like to see some of that money go into reducing the cost of bills. We believe, however, that where social tariffs work, they are funded from within the water company area. To answer the Minister’s specific question, we propose not a new tax on customers but that water companies be dragged kicking and screaming to introduce the social tariffs that would benefit their customers, because the reality is that the voluntary approach has not worked.

George Hollingbery: I have been hypothesising in my head and I think that the hon. Gentleman is setting a general case, which, when applied in some specific cases, could be extremely difficult to deliver. If a water company serviced many people who had affordability issues and not terribly many who did not have such issues, how would his scheme be funded?

Thomas Docherty: I am slightly puzzled, because as I far as I am aware the hon. Gentleman supports social tariffs.

George Hollingbery: I asked a specific question, to which I would like an answer.

Thomas Docherty: I am trying to address the hon. Gentleman’s question helpfully. I am surprised that he now seems to be setting his face against social tariffs.

George Hollingbery: On a point of information, I have never said that I am against social tariffs. I simply do not understand where the hon. Gentleman got that from.

Thomas Docherty: The hon. Gentleman appeared to be indicating that he was against the principle of social tariffs, which is that those who are most unable to afford to pay their water bills receive support from the general pool—pardon the pun—of customers in their area. If I have not misunderstood him, he seems to be suggesting that the number of people who receive support should vary from one water company area to another. He seemed to be suggesting that the water company should be allowed to work out how many people it wants to help and how to fund that.

George Hollingbery: I think the question I asked was antithetic to that. I think I said that if the number of people who require help with their water bills through the affordability scheme is worked out according to the hon. Gentleman’s method, which is presumably by household income, and it so happened that in one water company’s area 90% of people required support and 10% did not, how would that be funded?

Thomas Docherty: The hon. Gentleman is dragging me down a path on a matter that will be dealt with in secondary legislation, and I would probably be called out of order if I talked about that. If I have some leeway to answer the question, however, I am baffled as to how widely drawn the criteria would be for 90% of people to be inside the scheme and only 10% outside.

George Hollingbery: Will the hon. Gentleman give way?

Thomas Docherty: I want to make a little progress and then I will happily take a further intervention. The fundamental problem with the laissez-faire approach is that it is not helping those who most need help. Eighty thousand people came through citizens advice bureau doors last year to seek assistance with their water bills. Fewer than 100,000 people receive assistance from WaterSure or its equivalent in Wales.
Hundreds of thousands of households up and down the country are struggling day in, day out with the cost of living crisis. New clauses 29 and 30 would provide simple, effective measures finally to provide some relief to those hard-pressed families.

Pat Glass: It is a pleasure to serve under your chairmanship for the first time, Mrs Riordan. I want to talk to new clause 30, which is about affordability in general, but water bills in particular. We are all aware that life is hard out there for many of our constituents. My constituency is situated high in the north Pennines, where, incidentally, we have lots of water, largely because the previous water supplier made a major investment in Kielder before it was privatised, but my constituents still find it hard to pay their water bills. As we have heard, one in eight of our constituents are struggling to pay their water bills.
I recently held an event on getting ready for winter, because winter in the north Pennines is no laughing matter. Although it did not snow every day between November and March last winter, there was snow on the ground in my constituency every day.

Sheryll Murray: The hon. Lady is making a good case for her constituents. Are her constituents in the situation described by my hon. Friend the Member for Meon Valley, in which 90% of households require help? How would the scheme proposed by the shadow Minister actually work?

Pat Glass: I do not think that even this Government would come up with a scheme so ludicrous that 90% of those who contribute were eligible. That would be just ridiculous.

Thomas Docherty: I wonder whether the problem is that Conservative Members think that it is all grim up north and that we need a scheme in which 90% of people are eligible.

Pat Glass: I give way to the hon. Member for Hendon.

Matthew Offord: The confusion arises because the shadow Minister simply cannot say how the scheme would be funded. The Opposition recently called for a cross-subsidy to fund such a scheme, and even more recently they were talking about excess water company profits. Will the hon. Lady please tell us which one it would be?

Pat Glass: We are talking about cross-subsidisation, but I honestly do not believe that even this Government would come up with a scheme for which 90% would qualify. That would be just ludicrous.

Matthew Offord: I didn’t ask that.

Linda Riordan: Order. Please allow the hon. Member for North West Durham to be heard as you would expect to be heard when you speak.

Matthew Offord: Of course.

Pat Glass: One of the things I have found hard since entering Parliament in 2010 is the bullying, particularly of women, in the Chamber. It is completely unacceptable.

Sheryll Murray: On a point of order, Mrs Riordan. I am very disappointed to be accused of bullying when I asked a genuine question. I certainly had no intention of bullying the hon. Member for North West Durham with my intervention.

Linda Riordan: You have made your point.

Pat Glass: In my recent getting ready for winter event, I talked to two elderly ladies who were a little older than me—[ Interruption. ]

Linda Riordan: Order. The hon. Lady will be heard.

Pat Glass: I talked to two ladies who were a little older than me, and they were concerned about paying their bills, whether their bills to heat their homes or generally, including their water bills. The only solution that those two elderly ladies could think of was for one of them to give up their home and move in with the other. I counselled them on that because there are many reasons why such a solution could go wrong, but I can understand the real anxiety felt by those two ladies, who are not unique. Other Members will have such people in their constituency.
Following last week’s autumn statement, I am even more convinced that the UK is two very different countries. In the north, we have a recession, austerity cuts that are biting hard and widespread poverty made worse by policies such as the bedroom tax. We have very high levels of unemployment, particularly among our young. Although the Prime Minister regularly tells us that he has created 1 million new jobs in the north, those jobs have been created by getting rid of good-quality public sector jobs and replacing them with part-time, often zero-hours contract jobs on the minimum wage. The one thing that we do have is lots of water. In London and the south-east, where there is clearly no recession, I am told that it is as hard as ever to get a table in a good restaurant, house prices are booming, employment is booming and there is investment. We can see it every day. You have trains, you even have buses, and we do not have any of those in the north, but we have no—

Matthew Offord: On a point of order, Mrs Riordan, is this really about new clause 30 or about affordability?

Linda Riordan: It is totally relevant. It is about affordability.

Pat Glass: Thank you, Mrs Riordan. We were told a couple of years ago that in the south-east we were days away from having standpipes in our streets. That suggests to me that the great water privatisation project is failing to provide enough investment to deliver basic services if we get one dry winter followed by a dry summer in the richest, most populated part of the UK. Yet our water companies, which came so close to failing catastrophically to provide even a basic service to the south-east a couple of years ago continue to make huge, even obscene profits. Water companies appear to be vying with the energy companies, bankers and MPs to be top of the public hate list.
Water companies have seen huge profits of £37 billion since privatisation. They made £1.9 billion profit last year, of which £1.8 billion was paid out in bonuses and dividends, and they are borrowing to fund what little investment there is.

George Hollingbery: Will the hon. Lady give way?

Pat Glass: I will not. We have heard that Thames Water has just been refused authority to increase its prices by 11% to pay for the new London sewer. I suggest that Thames Water customers, of which I am one, have paid for this sewer over and over again. If Thames Water paid out a little less in bonuses and dividends it could pay for that sewer without borrowing or putting up prices.
I was extremely disappointed to hear last week that only three water companies have so far managed to put social tariff schemes in place. The representative from Water UK kept telling us, not very convincingly, that these three were put in place at the first opportunity. They have had five years to get their act together collectively. The way he blamed the Government, the regulator and, finally, customers will just not wash. Every customer who does pay is paying an extra £15 on their bill to cover bad debts and most are probably not aware of it. So much depends on the question and the way you ask it. If the water companies say to customers, “Would you like to pay a couple of extra pounds to cover a social tariff scheme?” the answer, especially with today’s cost of living, would be no. Most people are struggling. However, if it was made clear that they were actually paying £15 on every bill to cover bad debts, that would at least put the question into a little more perspective.
As things stand, the water companies can sit back, do absolutely nothing and pass on the cost of bad debts to their customers, because there is no incentive for them to put a social tariff scheme in place. Coming back to what I said at the beginning, my constituents and, I am sure, those of Government Members, are struggling enormously to pay bills, whether it is energy or water bills. It is really important that the Government build affordability into the Bill, otherwise constituents such as mine will simply turn into bad debts.

Emma Lewell-Buck: It is a pleasure to serve under your chairmanship, Mrs Riordan, and to follow my hon. Friend the Member for North West Durham. I support the amendments tabled by my hon. Friend the Member for Dunfermline and West Fife. As we have heard repeatedly, one of the objectives the Government set out in their White Paper is to make sure that water supply is affordable for consumers; but today, as for so many other essentials, water bills are rising for the average user, and the Government’s proposed solutions do not do enough. I support the new clauses because they would put the consumer’s interests at the heart of the water market.
Water bills do not always make the headlines in the same way as other costs, such as household, energy or petrol, but the fact is that they have increased.

Sheryll Murray: I know the hon. Lady comes from a different part of the country from me, but I do not think she has paid attention to the headlines that excessively high water bills in the south-west have been making for the past 14 years. Is she aware of the excessively high water bills we had consistently in the south-west under the Labour Government?

Emma Lewell-Buck: If you are concerned about the water bills in your constituency, you should back our amendments—

Sheryll Murray: On a point of order, Mrs Riordan. I am sure the hon. Lady did not intend to address you. [ Interruption. ]

Linda Riordan: Order.

Thomas Docherty: Further to that point of order, Mrs Riordan. I am sure the hon. Member for South East Cornwall does not mean to say we do not have a Chair for this sitting. I am sure she will take back that slur on you.

Sheryll Murray: Certainly, Mrs Riordan.

Linda Riordan: In that case, I call Emma Lewell-Buck.

Emma Lewell-Buck: The fact is that household water bills have increased by almost 50% since privatisation. At the same time, regional water companies made £1.9 billion profit last year.
In last week’s evidence sessions, we heard that there is a number of initiatives and schemes to assist with affordability, but many witnesses agreed that they lack teeth and that few end users benefit. Last week, the Minister was clear that he shares the water chiefs’ optimism that regional companies will take up social tariffs, but I believe that optimism is misplaced. At present, only three companies offer schemes, and only 25,000 customers get any benefit at all. When I asked my regional water company why it had not implemented social tariffs, it told me a similar story to the one the Committee heard last week from Dame Yve Buckland—that there is limited appetite among customers for social tariffs. Schemes are voluntary, so establishing one means convincing some customers to accept higher bills. Whatever the merits of such schemes, that will always be a hard sell, particularly when for the majority of people other household expenses are shooting up, thanks to the cost of living crisis.
If affordability is really at the heart of what the Government want to do, they should accept our proposals for a national affordability scheme that would guarantee help for those who struggle that most with their bills, benefit people all over the country and, importantly, not tighten the squeeze on households further up the income ladder.

George Hollingbery: I absolutely understand the point the hon. Lady is making, and I commend her enthusiasm. Affordability is indeed a great concern for a great many consumers, but I think she just said that in conversations with her, water companies suggested that they did not like to impose these social arrangements because others in the water area would have to pick up the bill. However, I believe the Opposition’s scheme would make that mandatory across the country. In this instance, the hon. Lady cannot have her cake and eat it.

Emma Lewell-Buck: Our scheme is slightly different from what the hon. Gentleman describes.
Social tariffs are not the only option available to those struggling with their bills: there are also WaterSure and Water Direct. Although both are well intentioned, and we heard in evidence that some water companies employ a range of other measures to assist customers, too often they do not reach the customers who need them the most because they are found only by those who seek them out. Many people in my constituency do not even know that they qualify for these schemes, even though they have the potential to make a real difference.
It is unrealistic to expect every consumer to have the time or knowledge to get to grips with the numerous options available. My constituents already face a host of competing financial pressures on top of the ordinary stresses and strains of work and family life; that is doubly true for some of my most vulnerable residents, such as the elderly or those with learning difficulties. The market needs to work for those customers by making information about schemes such as WaterSure explicit. New clause 29 would achieve that by placing a duty on water companies to include such information with bills.

Sheryll Murray: Will the hon. Lady explain why, when the Labour Government introduced WaterSure, they did not take action to ensure that what Labour Members are calling for now was introduced then?
 Thomas Docherty  rose—

Emma Lewell-Buck: I give way to my hon. Friend the Member for Dunfermline and West Fife.

Thomas Docherty: It might help if I remind the hon. Member for South East Cornwall that social tariffs were introduced by the Labour Government as a direct result of the pleas from the water companies to go down the voluntary route, and the fact is they have not worked.

Emma Lewell-Buck: I end by saying that the spirit of consensus that has been shown on other parts of the Bill should be shown on amendment 135 and new clauses 29 and 30.

John Cryer: It is a pleasure to serve under your chairmanship, Mrs Riordan.
I will to speak briefly, largely from the point of view of a constituency interest. I mentioned when we took evidence last week from—was his name Rob Wesley? He is clearly a memorable figure. He represented the industry. Before I elaborate on this I should say that I found his answers completely unconvincing. He may have responded to other hon. Members in a constructive way but I did not get a single answer to any of my questions. Thames Water, as I mentioned last week, is planning to increase bills by 11%. I represent three or four of the poorest wards in London, which means three or four of the poorest wards in Britain. I also represent some relatively better off wards, but people living in the three or four poorest wards are already struggling to pay their energy bills and water bills, and I worry about the effect that the 11% increase will have on them. They will struggle even more than they do now.
This is not directly relevant, but I will mention it briefly: according to Metro last week, Thames Water said that
“it intends to pay no corporation tax for the next decade”.
For Thames Water to make that announcement on top of the 11% rise in people’s bills is really rubbing salt into the wound. I know that some of my constituents, perhaps on their way home from work, reading in Metro that this company, which is extremely profitable and pays large dividends, would increase water bills by 11% and would not pay any corporation tax, felt it keenly. Thames Water does not have any social tariff scheme, at least not yet, and as far as I know—I am open to correction—it has no plan to introduce a social tariff scheme. If anyone knows any more about this, perhaps they will intervene to let me know if there are any plans in the pipeline.
Certain figures spring to mind generally with the water industry. Bills have consistently risen by more than inflation. As has been pointed out, £37 billion has been paid out in dividends and many water companies engage in elaborate tax avoidance schemes. For the avoidance of doubt, the idea that Opposition Members are ferocious critics of the water industry and all Government Members are unalloyed fans is not quite accurate. In the debate last month, several Government Members were very critical of the water industry. The hon. Member for Dover (Charlie Elphicke) said:
“The unacceptable, even antisocial, tax avoidance culture in the water industry has meant that many companies have not paid tax for years.”—[Official Report, 5 November 2013; Vol. 570, c. 181.]
He was not alone.

George Hollingbery: I largely agree with the hon. Gentleman and with my hon. Friend the Member for Dover. All companies that operate in this country should pay tax in this county and should support the public goods which we want to develop and which they use. However, I hope the hon. Gentleman will acknowledge that some of those headline numbers are a little more complex than they appear on the surface. The water industry is financed in a particular way, which requires huge amounts of debt. It cannot be compared with regular everyday companies. Does the hon. Gentleman understand that life is a little more complex than it appears on the surface?

John Cryer: Life is always more complicated than the headlines say it is. Members on both sides of the House, after the events of the past two or three years and our experiences with the press, know that life is often more complicated than it appears. Nevertheless, the water industry has done extremely well since privatisation. Investment in the industry was sustained at a reasonable level until 2007, but since then it has declined while profits have continued unabated. I know that the reality is more complicated, but the water industry is making considerable profits and is paying out considerable dividends. Investment has been on the slide for a number of years and several water companies are planning to increase bills further than they already have. They have consistently increased bills by more than the rate of inflation.

Thomas Docherty: My hon. Friend is making a compelling case. Does he share my concern that some companies—for example, Thames Water—have made bigger than expected returns because they took advantage of quantitative easing? It is therefore right that some of that money should be used to help hard-pressed customers.

Linda Riordan: Order. Will hon. Members keep to the topic of affordability?

John Cryer: Thank you, Mrs Riordan. On that issue, I was about to say that those profits could have been used to introduce social tariffs to increase affordability for poorer people, such as my constituents. The bottom line is that the industry has not increased capacity since privatisation in 1989. The same reservoirs supply water largely through the same pipes—certainly the same pipe network—to a similar number of customers, but the water companies have made increased profits, and only three have introduced social tariff schemes.
I again refer to the evidence session last week. I and one or two other hon. Members asked Rob Wesley about the lack of social tariffs, but his answers were completely unconvincing. He simply mumbled about regulation holding water companies back. It is unacceptable that those extremely profitable companies have not introduced affordability schemes. They say that there is too much Government regulation, but that is a pathetic analysis. To be honest, I want to see the water industry in public ownership, but I am not going to get that, regardless of who is in government. [Interruption.] I thought that mentioning public ownership would excite Government Members. It is like mentioning the devil. Failing that, there must be an effective affordability scheme, so the people I represent can pay their water bills.

Chris Evans: It is a pleasure to serve under your chairmanship once again, Mrs Riordan. I rise to speak in support of the new clauses in the name of my hon. Friend the Member for Dunfermline and West Fife. There is a failure in the water market, as there has been in all the privatised industries except telecoms. However, a failure in the water market is more damaging than in any other market, because water is essential to life. We have seen the water companies pleading poverty on the one hand, but paying out massive dividends on the other. We have seen indebtedness increase in constituencies such as mine. We have seen water shortages. More people are struggling with their bills than ever before. We really are in a cost-of-living crisis; it is not just a slogan.
People are struggling to pay their water bills because the water companies provide only three social tariff schemes. How must those people feel when they hear that Severn Trent Water paid out £6.2 billion in dividends, Thames Water paid out £6.3 billion, United Utilities Water in the north-west paid out £7.3 billion, Anglian Water paid out £6 billion, and there is a high level of tax avoidance in the system? If I was in their position, I would wonder what was going on. Then I hear Government Members asking about affordability and where we will get the money from. Has the Minister given any thought to what the former Prime Minister, Sir John Major, said about looking at a windfall tax? It could fund some sort of affordability scheme. Equally, we could talk about market failure, and why water companies are allowed to pay out such dividends.

Sheryll Murray: Will the hon. Gentleman clarify whether he is proposing a windfall tax?

Chris Evans: I am in no position to propose a windfall tax; I asked whether the Minister would like to study what the esteemed former Prime Minister and former leader of the Conservative party said. When Sir John Major was the Prime Minister, Government Members were so loyal; perhaps they will listen to him and consider whether there is any merit in a windfall tax.
There is an anger about the utility companies that we have to put into perspective. Bosses are paid £1 million a year for nothing more than collecting rainwater and putting it down a pipe. Compare that with a doctor or a nurse. The utility bosses are being paid five or six times as much as someone working on the front line saving lives. The Minister talks about the affordability scheme; what assessment has been made of the effect on bills of the bonuses, payments and dividends being paid out? What about the wonderful scheme that water companies have come up with for compulsory water meters? That represents an investment of £2.5 billion. Is that really the best use of that money? I agree with my hon. Friend the Member for Leyton and Wanstead on that.
I single out Thames Water, which had a run-off problem. It came up with a £4 billion scheme, which it could not finance, despite £6 billion of dividends being paid out. Who underwrote that scheme? The Government. For all the talk about these companies being privatised, they are still being run by the Government. If the Government can provide a £4 billion guarantee, why can they not provide an affordability scheme? Where is all the money going?
I can see that the Minister is ready to respond, so I will conclude. There are people out there who have no faith in Ofwat, civil service officials, Ministers or Parliament, because all they see are aggressive tactics from the water companies and no one standing up to them. With the new clauses, he has a real chance to draw a line under what the water companies are doing and bring about an affordability scheme. We have made suggestions, and I hope that he takes them on board.

Dan Rogerson: This is an important debate for us to have. I understand, Mrs Riordan, that you wanted to ensure that we explored the issues around affordability as they relate to the amendments. You made it clear that hon. Members have had the opportunity to make the case on the problems that people may face, and there is agreement across the Committee that there are water bill payers who struggle to pay their bills.
As a south-west MP, I am well aware of the issue, as the hon. Member for Dunfermline and West Fife pointed out. This has been an issue in my part of the world for much longer than it has in other parts of the world. As water bills went up across the rest of the country, they were much higher in the south-west. That is why I bear the scars of lobbying Ministers in the previous Government to see whether they would do something. I pay tribute to them, as I did at the time, for putting in place the Walker review, which tested evidence on how we might deal with the situation in the south-west, among other issues. However, that review did not result in any action, so I am delighted that the coalition Government have done something about the issue.
The hon. Member for Dunfermline and West Fife pointed out that the previous Government set up the framework legislation for the social tariffs, which are one of the tools that water companies can use to ensure that they are supporting customers who have been struggling to pay their bills, but they are one tool among a number of others. I shall turn in more detail to the amendment and new clauses in a little while, but first I want to respond to points that others have raised.

Thomas Docherty: I was trying not to interrupt the Minister in full flow, but on the point about social tariffs, will he say whether he thinks it acceptable that, even in their current business plans, many water companies still do not propose to introduce social tariffs in the coming year?

Dan Rogerson: I would be happy to come back on that and update the hon. Gentleman, and I will return to the plans for social tariffs that companies are bringing forward. However, I wanted to pick up on a couple of points made by other speakers in the debate. The hon. Members for North West Durham, and for South Shields, both from the north-east, have talked about issues that their constituents face, and the conversations that they have had with their water company about pursuing a social tariff. It is admirable that MPs are engaging with water companies, making the case for a social tariff, and talking to those companies about what they can do for MPs’ constituents.
The hon. Member for Leyton and Wanstead raised a couple of points about Thames Water and its approach to social tariffs. Thames has put a social tariff in its business plan and intends to introduce it in 2014; it is now working towards implementing it. I hope that the hon. Gentleman will welcome that. Again, he is right to challenge his local water company on this point, and I am pleased that it is responding to the challenge that he and other MPs, as well as local organisations, will make in that regard. He also made points about the taxation system. We could range widely over how corporation tax and other taxes are viewed, but I suspect that that is more a matter for another debate. However, in response to his point about taxes that companies defer on the basis of the investment that they are making in capital, this happens across all sectors and in a whole range of businesses: it is not peculiar to this industry. Of course, Ofwat will take that into account when looking at the price plans, tariffs and investment with which companies come forward.
A study has shown that a 1% increase in the cost of capital—we were talking about how companies can borrow to invest—can add £20 to water and sewerage bills, so maintaining stability of the regulatory framework is essential for the stability of customers’ bills. In other words, if we send out signals that we will slap windfall taxes on companies that seek to secure money to invest, the message is likely to drive up the cost of that investment, and drive up bills for consumers, rather than lower them.

John Cryer: One of the points that I was making was that investment in infrastructure has been in decline since 2007. That is not universally the case, and as the hon. Member for Meon Valley pointed out, things are often more complicated behind the headlines—some companies have sustained investment—but generally, across the industry, investment has been in decline since 2007, so the argument, “We can defer taxes; we have all these baroque tax avoidance schemes because we are investing,” does not quite stand up.

Dan Rogerson: The hon. Gentleman is also talking about what is probably the biggest capital scheme that will come forward in future years, the Thames tideway tunnel, which is a pretty huge investment. I think he would agree that, with regard to that company, that is setting out a direction of travel; there is a big investment there.

Thomas Docherty: On excess profits and windfall profits, will the Minister clear this up once and for all? Do the Government think that it is acceptable for companies to make £1.9 billion in pre-tax profits and pay out £1.8 billion to their shareholders?

Dan Rogerson: The hon. Gentleman and I—and other hon. Members who are here—debated affordability two or three weeks ago, and explored some of these issues. As the hon. Member for Leyton and Wanstead pointed out, Members across the House raised issues about companies’ behaviour and their complicated arrangements. That is why the Secretary of State has written clearly to water companies to say that he expects them to take account of the cost of borrowing and the situation that customers are facing. That is why Ofwat is taking far more account not just of issues around profits, investment and prices for consumers, but of issues around transparency and companies’ willingness to engage with the regulator to ensure that they are meeting people’s aspirations and understanding of how companies should behave and make things available. That is why I very much welcome Ofwat’s newer approach, which is far more rigorous and proportionate.
I hope that will reassure the hon. Member for Dunfermline and West Fife. It certainly goes much of the way to reassuring me that we are entering a period in which water companies will expect to have these things looked at incredibly closely. They will also expect that the benefits they have had from the low cost of borrowing will be shared with customers.
I will now deal in more detail with the hon. Gentleman’s amendment 135 and new clause 29. Water companies do not have complex tariff structures. In practice, the sole choice for the majority of household customers is whether to pay according to the amount of water they use—a metered tariff—or according to the rateable value of their home—an unmetered tariff. The cheapest option therefore depends on the amount of water used by the household. Many smaller households with low water use can benefit from having a meter. Water companies are required to fit a water meter free of charge on request. They also advise customers on whether they might benefit from the installation of a meter.
There is no evidence that further regulation is required in this area. All companies already include details of WaterSure on their household bills. As the hon. Gentleman pointed out, we heard in evidence from the Consumer Council for Water that it has been doing a great deal of work with companies on this area. The hon. Gentleman also raised the issue of updated figures on the take-up of WaterSure. I have some figures. Discussions with the Consumer Council for Water have confirmed this week that all the companies make reference to WaterSure and ensure that that information is available. On take-up, the overall figures in England for August this year are 70,510.

Neil Parish: I thank the Minister for giving way. I feel that the Government could be a little stronger in bringing about metering. We want to make sure that people use water effectively and efficiently; if they are metered, they pay for the exact amount of water that they have used, and will look after that water. A very large household might well not want their water metered, but that will not make them save water and use it cost-effectively. Metering will help the environment because it will extract less water. The Government should be much more proactive in bringing companies into line with South West Water and others that have brought in a lot of metering.

Dan Rogerson: On crossing to universal metering, there would clearly be environmental benefits if people understood better how much water they used and had that information. The hon. Gentleman and I represent constituencies in an area where many people have gone over to metering. In areas where that has started, the process snowballs, because ultimately the non-metered bills are seen to be higher. In some other parts of the country, this proposal does not meet with the approval of customers. The hon. Member for Islwyn pointed out that he was not a fan of compulsory metering and was concerned about the effects that it might have. We need to maintain an approach that is right for each area. Given the cost on companies of moving to metering—installation is a cost not to customers, but to companies—companies might invest in meters a lot of money that could be spent on other infrastructure, which we also want. We need a balance, which is why the Government are not convinced that we should go for universal metering.

Thomas Docherty: I am most grateful to the Minister for giving way. To take him back to the specific issues on new clause 29, will he explain why he has set his face against the very thing that the Department of Energy and Climate Change requires energy companies to do?

Dan Rogerson: As I set out at the beginning of my remarks, the situation with energy is very different: the number of tariffs and the amount of choice in the energy market is very different from what we have in the water market. That is why I do not believe the case is made to do what the hon. Gentleman suggests.
 Thomas Docherty  rose—

Dan Rogerson: I will give way to the hon. Gentleman one more time, and then I want to make a little progress.

Thomas Docherty: I do not wish to hold the Minister back from his lengthy justification of the Government’s position, but he has only half-answered the question. What he said perhaps explains why he is against the tariff system, but DECC also requires energy companies to state what support they provide to struggling households. Why will he not do as his colleagues at DECC do?

Dan Rogerson: The reason I gave for that is that companies are already doing so. As we heard from the Consumer Council for Water, all companies are now giving that information, so it seems a little odd to legislate on the face of the Bill to force people to do something they are already doing. The Opposition may now favour that approach in other areas as well, but we will have to wait and see.
We heard that the Consumer Council for Water worked very closely with companies on the format of bills. They advise that one of the biggest risks in using water bills as a means of communication with customers is information overload. That is another reason why I consider the amendments to be unnecessary.
New clause 30, also tabled by the hon. Gentleman, would require the Government to introduce by secondary legislation what is described as a national affordability scheme, but neither the nature of the scheme envisaged, nor how it would be funded, is entirely clear. In the debate we have drawn out a little bit more—there have been references to windfall taxes and so on, although no specific proposals. I say to the hon. Member for Islwyn that first of all he needs to convince the Members on his own Front Bench, and then we could have a debate in Parliament between the parties.

Chris Evans: What I raised was not suggested by the Opposition but by a former Conservative Member, Sir John Major. I wonder what the Minister’s views are.

Dan Rogerson: While many Members hold Sir John in high regard for his contribution to national life, in my early years in politics I disagreed with that gentleman on a number of things, and I am sure I will continue to do so. Despite the progress made in reaching accommodation between the parties in coalition, some differences remain, and this is another area where I differ from Sir John.
We have always been clear that a nationally mandated social tariff would be difficult to introduce. The hon. Member for Dunfermline and West Fife pointed out that there would be issues with cross-subsidy between water company areas, and he rejects that approach, so we are now a little bit clearer about what he is suggesting. A national scheme for affordability, if it were done on that basis, could have ignored the realities of the water industry, which is structured regionally, but the hon. Gentleman is not seeking to do that. He also rejected the possibility of funding the scheme from general taxation. In effect, he is talking about a kind of social tariff, funded within region, as are those that are already being introduced.
My hon. Friend the Member for Meon Valley made a fair point, although admittedly he went to an extreme by picking a figure of 90%. If there were nationally set criteria—income-based, for example—under which people became eligible to receive this, then because of regrettable disparities in income between different parts of the country and different water company areas, different numbers of people would be eligible in different water company areas, and because of that, the burden on the remaining customers would vary by area.
Later we will turn to the flood insurance clauses and the proposed method for funding Flood Re—a levy on other customers at a level agreed with the industry. That would be standard across the country. We are not saying that those customers who happen to live near people who are subject to flooding should pay a lot more than those in other parts of the country. I think that this is a risk in the approach set out by the hon. Member for Dunfermline and West Fife. If we have nationally set criteria and different numbers of people who qualify in each area, there would be a higher burden on remaining bill payers, some of whom may well be struggling but just fail to qualify for a social tariff, in different water company areas. I think that this is a problem with the route the hon. Gentleman is now suggesting.
We want people who are struggling to pay to get help, and all water and sewerage companies have developed packages to help customers with affordability issues. These include customer assistance funds, support tariffs, debt advice and water efficiency measures. Social tariffs provide an extra tool, and many companies are now introducing them. Statutory guidance requires that companies work with customers to develop local solutions that are acceptable to bill payers and tailored to meet local circumstances.
Water companies have been able to introduce social tariffs since April this year, and three have already done so. Most others are also now bringing forward plans to do so.

Thomas Docherty: The Minister says “most others”. Going on for half a dozen have no plans to introduce such tariffs. Is that acceptable?

Dan Rogerson: We must ensure that companies’ proposals are the right ones for local circumstances. The fact that the vast majority of companies are now setting out their plans shows that the argument for social tariffs has been won and that they are being implemented.
There are several dangers with the hon. Gentleman’s national affordability scheme. If it is structured on a national basis, there is a danger that Treasury rules could consider it a tax. With one structure across the country, there could be problems arising from income disparity and the different conditions in different areas.

Thomas Docherty: Will the Minister give way?

Dan Rogerson: I want to conclude my remarks. I am sure that the hon. Gentleman will respond to the debate.
It would also be an odd state of affairs in a price-regulated sector. There is evidence that the regulator is being much tougher with companies and that companies are responding. The best way of keeping down bills for everybody is to have strong regulation, which is the direction that the Government have set out for the regulator and that the regulator has responded to. On that basis, I cannot support the amendment.

Thomas Docherty: Although I am grateful for the opportunity, it is with genuine disappointment that I respond to the Minister. I was in quite a chipper mood when walking in this morning.
New clause 29 sets out a common-sense approach to ensure that all water companies standardise the way they provide information. It builds on the evidence we heard from the Consumer Council for Water just last week. Let me summarise it again, because the Minister was obviously not paying attention. Only a third of those eligible for WaterSure are receiving the assistance to which they are entitled. The Consumer Council for Water explicitly said—I will not read it back to him, because he can get it from his officials—that we have to do more to bring the attention—[Interruption.] I am not sure that the Minister can read for himself, given that he spent much of his speech talking about things that we are not proposing. He discussed taxation, which we are not proposing. He talked about a national levy scheme, which we are not proposing.
In the hour or so during which Opposition Members spoke about the need for affordability, not one Government Member spoke about what they wanted to do to help customers. That is a damning indictment. I am astonished that the Minister spent so much of his speech talking about things that we are not doing, rather than what the Government will do.

George Hollingbery: Does the hon. Gentleman agree that the vast majority of Opposition Members, while understandably impassioned about their constituents, actually spent a lot of time discussing a scheme that he was not proposing?

Thomas Docherty: I do not recognise that description. We had four brilliant, powerful speeches, during which Opposition Members stood up for their constituents. It is a shame that not one Government Member stood up to speak about what they wanted to do to help their constituents.
Let me briefly deal with the Minister’s points. On national criteria, it is entirely reasonable to say that, whether someone lives in Halifax, Newton Abbot, South Shields or the south-west, people should know the criteria that would make them eligible for assistance. For the benefit of Government Members, let me read out the number of households in each region that are paying more than the 5% of income that the Government believe is a sign of water poverty. These are the Government’s own statistics. In the south-west region, which several Members here represent, 120,000 households are struggling to pay their bills: in the north-west, the United Utilities region, 370,000 households are struggling; in the Northumbria region—we heard some excellent speeches from Members from that region—110,000 households are struggling, and in the Thames region, 620,000 households are struggling. That is according to the Government’s own statistics and criteria.

Sheryll Murray: The hon. Gentleman has singled out the south-west again. Will he acknowledge that for 12 years under the Labour Government, the south-west, with its disproportionately high water bills, was completely ignored and it took this coalition Government to start to help hard-pressed consumers by providing some assistance with their water bills?

Thomas Docherty: I am not sure how referring to Thames, north-west and the north-east means I am singling out the south-west region, although I know that the region is very special. The hon. Lady repeats this myth that the Labour Government did not do anything to help hard-pressed customers. Well, my five-year-old believes that if he says something often enough it becomes the truth. The reality is that the Labour Government were the only Government since privatisation to actually bring about a cut in water bills.

Dan Rogerson: Will the hon. Gentleman confirm under which Government the current price review period began, and when the bills that people are paying at the moment and that he is so concerned about were set?

Thomas Docherty: It was under the last Labour Government. I am sorry that the Minister was not aware of that fact, but I am happy to provide clarity for him.
The Minister went on to contradict himself. He is very quick-footed and I think it was quite a good attempt to slip it past without any Members noticing. On the one hand he praises the new Flood Re scheme, which may be debated later this week if we make sufficient progress, and says it is a commendable scheme because we are going to have cross-subsidisation of households; then he wrings his hands and says “We don’t want cross-subsidisation to deal with affordability.”

Dan Rogerson: The hon. Gentleman clearly missed the point. The point I was making was that the Flood Re levy is set as a standard levy across all customers. The sort of thing that he wants to do, which is introduce a national scheme, on national criteria but paid within water company region, would not protect bill payers in that way. In fact, as my hon. Friend the Member for Meon Valley pointed out, in some areas people who may well be struggling to pay their bills already would have a much higher levy than in other areas.

Thomas Docherty: That is half an explanation, but I am keen to make progress.
The Minister quite critical of what he described as a “lack of detail” in our new clauses. I simply do not accept that, for the obvious reason that we are talking about secondary legislation. The Opposition are happy to enter into bipartisan discussions about a national affordability scheme if the Government want to, but it looks as if the Government is not interested in doing so, and that is disappointing.

Dan Rogerson: I am always happy to talk to the hon. Gentleman; it is always a pleasure to do so. I am grateful to him for setting out some of the detail of his scheme. As I pointed out in my previous intervention, that makes me even less likely to support it than I would have been on the vague basis that it was set out before.

Thomas Docherty: I am not sure how the hon. Gentleman is any less likely to support it than he was in the first place, but that is interesting.
The Government are totally against cross-subsidisation yet they support bad debt provision. Every one of our water companies has a bad debt provision, which adds about £15 to every single water bill, regardless of income. It is not even spread on a sliding scale; it is a flat rate of £15. Perhaps the Minister can explain why he is in favour of cross-subsidisation when it comes to Flood Re or bad debt, but is against helping those who are hardest pressed?

Dan Rogerson: Any social tariff, which, as I have made absolutely clear, I support, is a form of cross-subsidisation, so the hon. Gentleman completely mischaracterises my argument. My point is that social tariffs are set according to local circumstances and are very much based on what customers who pay into the system can afford. The hon. Gentleman’s system would place no cap on that, and people in hard-pressed regions, such as the south-west, might find themselves paying a lot more to meet some nationally set criteria that would be more applicable to other regions.

Thomas Docherty: I am sorry that the Minister inadvertently misrepresents the Opposition’s position. We are saying that the criteria would be set nationally, but the scheme would be delivered—[ Interruption. ] The Minister throws his hands up in the air dramatically, but the Opposition believe that customers in the south-west region should have the same support as customers in the north-west or the north-east and that the south-east should be the same as the north-east. I am sorry that the Minister does not support that.
Finally, the Minister said, with a genuinely straight face, that we do not need a national scheme because we have strong regulation. The Opposition do not believe that writing one letter to the water companies in the past 12 months shows strong leadership and strong regulation. The water companies have had far too long; they are not making progress on social tariffs and we need to act.

Dan Rogerson: The hon. Gentleman is an expert on many areas of the water industry, but I hope he is not saying that the Secretary of State was seeking in his letter to be the regulator for the water industry. I think the hon. Gentleman is aware that that is Ofwat’s job.

Thomas Docherty: The problem is that the Secretary of State is not interested. He believes he can adopt a laissez-faire attitude and leave it up to the British Insurance Brokers Association to get on with things. It is about time he got a grip on this.
The water companies are failing in their fundamental duty to help constituents up and down the country. Even when the Minister had the opportunity to condemn them for not introducing social tariffs, he chose not to take it. Someone needs to stand up for hard-pressed consumers. It is quite clear Government Members will not, but Opposition Members will.

Linda Riordan: Does the hon. Gentleman wish to withdraw the amendment?

Thomas Docherty: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Thomas Docherty: I beg to move amendment 138, in clause16,page47,line36,at end insert—
‘(i) make provision about the rates of charges to household premises and non-household premises.’.

Linda Riordan: With this it will be convenient to discuss new clause 31—Oversight of charges—
‘In section 2 of the Water Industry Act 1991 (general duties with respect of the water industry), after subsection (2C) there is inserted—
“(2CA) For the purposes of subsection (2A)(a) above the Secretary of State or, as the case may be, the Authority shall have regard to the rates of charges to—
(a) household premises; and
(b) non-household premises.”.’.

Ofwat are required to consider the rates of charges to household and non-household premises.

Thomas Docherty: I am most grateful for the opportunity to discuss these provisions. I do not intend to detain the Committee long.
This is, I suspect, one of those debates the Minister wishes he did not have to take part in. We will be referring to the evidence and report produced by the Select Committee on Environment, Food and Rural Affairs, which were published last Session, when the Minister had the pleasure of serving with the hon. Member for Tiverton and Honiton and me on that Committee. The provisions deal with a fundamental point about de-averaging prices. With your permission, Mrs Riordan, I will talk to the amendment and the new clause at the same time.
We have had some good debates over the past two and a half years about the merits of cheese and cream from different parts of the United Kingdom. The Minister has made a powerful case for Cornish cheddar and cream being among the finest in England, while the hon. Member for Tiverton and Honiton—I may be starting a blue-on-yellow fight—would argue that Devon has the best cheese, although we all know that Yorkshire has the best cheese in England, Mrs Riordan.
I raise the issue of creameries and cheeseries—

Sheryll Murray: Cheeseries?

Thomas Docherty: If it is not cheesery, perhaps the Minister can get some inspiration from his officials and tell us what the word is.

Dan Rogerson: Creamery is the word for a cheese maker.

Thomas Docherty: I am most grateful. If nothing else, we have had some enlightenment from the Minister on that critical topic.
I raise the issue of the dairy industry because the Select Committee took evidence on it when we looked at de-averaging in the last Session. The Water Industry Commission for Scotland said this:
“If a dairy in a rural community were to [identity an alternative source of water that would meet its needs or] reduce the strength or volume of its waste, this could lead to the partial stranding of an asset built to serve that customer. It may be the only significant business…in the area and potentially significant costs will now have to be met by those customers that remain, including households if the asset that was constructed is to be paid for in full.”
We debated examples of that last week. The Committee will recall the good discussion we had about Albion Water and Shotton paper mill. The Minister did not quite address competition law, so perhaps I can press him to say a bit more about that. As he knows, if he goes back to the 2006 case of Albion Water and Shotton paper mill, the tribunal warned of the danger that, in competition law—many clever lawyers will seek to overturn the intention of Ministers—if a dairy company or whoever else decides reasonably to change its retail supplier, it could leave the asset stranded and the retailer, by invoking that law, will not have to meet some of the costs that the water wholesaler is left with. Unfortunately, those costs will be passed on to other non-domestic and domestic customers in that area.
The reason why that has not been an issue in Scotland is that clauses like the ones we propose were put into the Bill that set up that system. This would be a technical change, which is designed, as the Minister knows, to be genuinely helpful. Hopefully, no one in the Committee wants to see assets stranded with household and other business customers left to pick up the pieces. I do not intend to keep us for much longer, but, if the Government do not accept the advice from WICS and the Select Committee, will the Minister tell us why?

Dan Rogerson: I am always grateful when the hon. Gentleman offers his help. He is keen to point out how helpful he has been. Perhaps he was being slightly less helpful when he accused me of not being able to read, but we will gloss over that.
The amendments are unnecessary. Ofwat is already obliged to further the consumer objective and Ofwat is the body that sets the rates for a five-year period for all customers, which includes both household and non-household customers. The hon. Gentleman might want to explore the impact of his proposed changes on household customers. We were clear in an earlier debate that competition law does not apply where access to markets and charges are regulated—the Water Industry Act 1991 applies.
In the spirit of trying to be helpful, I hope that that reassures the hon. Gentleman a little. I think essentially we have a disagreement on how robust the framework is to prevent the sort of situation that the hon. Gentleman is concerned about.

Thomas Docherty: The Minister will appreciate that we have a technical, rather than political, disagreement. In light of the Albion case in 2006, in which competition law trumped the legislation, will he set out the advice he has had from his officials on why that will not be a problem on this occasion?

Dan Rogerson: The case to which he refers rumbled on for a great length of time and affected the ability of a new entrant into the industry, Albion Water, to take forward some other projects that it wanted to engage with. I mentioned in previous debates that I have seen a residential development in which it is involved in Gloucestershire. It is using grey water and providing opportunities to capture water and recycle it through new houses. That is a positive thing. The hon. Gentleman is concerned about its entry into the market in Wales. I should like to put it on the record that I am pleased to see that company, as a new entrant, coming up with innovative solutions for household customers as well.

Neil Parish: We all want to see more competition, but we have to ensure that when a retail company comes in it charges enough for that water so that any grey water or waste water that comes from those plants is also dealt with through the wholesaler. Is that the point that we are adequately covering?

Dan Rogerson: With regard to the specifics of drawing parallels with what happened in that case and projecting that forward to the provisions in the Bill, that case was brought under the Competition Act 2010. The Water Industry Act 1991 at the time did not regulate the arrangements applicable to the supply to the Shotton paper mill. This is a key difference. Now, as I have explained, in future we would look at the situation under the Water Industry Act 1991 rather than under the Competition Act 2010. As the hon. Gentleman said, we do not disagree about some of the directions in which we would like to see things move, but the question is whether the provisions currently in place are sufficient to ensure that we can move forward with confidence. It is my belief that the hon. Gentleman’s amendments are not necessary.

Thomas Docherty: Before the Minister finishes, can he clarify this for me? He seems to accept that we have a genuine concern, but he believes that the amendment is unnecessary. If he assumes that the amendment would not be detrimental to the Bill, why does he not just accept it and then we could have belt and braces?

Dan Rogerson: That is an approach one can take in some aspects of life, but I do not think we need to introduce legislation, just in case, even though we are confident that it is unnecessary. We could have Bills that were much larger were we to double legislate in a number of circumstances, even if we believed that the provisions, based on the evidence, were unnecessary. So on that basis I would still resist the hon. Gentleman’s amendment.

Thomas Docherty: I will not detain the Committee long. We have quite a lot to get through. I am again disappointed in the Minister’s approach. This is an attempt to tidy up what the Select Committee felt was a discrepancy in the Bill. As I have already highlighted, this is not a problem in Scotland because there is a specific provision. I honestly believe that this is another example of the civil servants digging their heels in because someone else came up with the idea rather than them. My fundamental concern is that I have a legal note from a very senior legal practice that sets out exactly how one could get round the Minister’s assurances.
The key issue is that if we go back to the Albion Water case, which is the fundamental danger in all of this, the chapter 2 prohibitions in the Competition Act 2010 require a statutory obligation or dominant undertaking to be placed in the Bill. We fear that in 2018 and 2019, once the market has opened up, we will have to come back to pass emergency legislation because the civil servants have been digging their heels in. We will seek to withdraw the paving amendment today, but will press it to a vote next week if the Minister does not want to take the weekend to reflect on his position. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: 93, in clause16,page48,line11,leave out ‘review the’ and insert ‘revise’.
Amendment 94, in clause16,page48,line12,at end insert—
‘( ) The Authority must issue revised rules if—
(a) guidance is issued under section 143D, and
(b) the Authority, having regard to that guidance, considers that it is appropriate to revise the rules.’.
Amendment 32, in clause16,page48,line34,leave out from ‘rules’ to end of line 35.
Amendment 33, in clause16,page49,line2,at end insert—
‘( ) This section is subject to section 143CA.
143CARules under section 143B: minor or urgent revisions
(1) This section applies if the Authority proposes to issue revised rules under section 143B and, in the view of the Authority, the revision or each of the revisions proposed to be made is—
(a) a revision for which consultation is unnecessary, or
(b) a revision that it is necessary or desirable to make without delay.
(2) Section 143C does not apply to the proposed revised rules.
(3) Before issuing the revised rules, the Authority must give notice to the Minister of its intention to issue revised rules.
(4) Before the revised rules are issued, the Minister may direct the Authority not to issue the revised rules.
(5) A direction under subsection (4) must be given within the period of 14 days beginning with the day after the day on which notice is given under subsection (3), and the Authority may not issue the revised rules in question before—
(a) that period of 14 days expires, or
(b) the Minister notifies the Authority that no direction under subsection (4) will be given in relation to the revised rules,
whichever is the sooner.
(6) Once the Authority has issued the revised rules, it must give notice as soon as reasonably practicable of—
(a) the issuing of the revised rules, and
(b) as regards each revision contained in them, whether in the view of the Authority the revision falls within paragraph (a) or (b) of subsection (1).
(7) Notice under subsection (6) is to be given to such persons as the Authority considers appropriate.
(8) Unless the Authority gives notice that a revision in revised rules is in the view of the Authority a revision falling within subsection (1)(a), the revision ceases to have effect at the end of the period of six months beginning with the day after that on which the revised rules are issued.
(9) In this section “the Minister” has the meaning given by section 143C.’.
Amendment 95, in clause16,page49,line4,leave out ‘must’ and insert ‘may’.—(Dan Rogerson.)

Clause 16, as amended, ordered to stand part of the Bill.

Clause 17  - Rules about charges for connections etc

Amendments made: 96, in clause17,page50,line8,at end insert—
() make provision about publication of the charges that may be imposed.’.
Amendment 97, in clause17,page50,line47,leave out ‘review’ and insert ‘revise’.
Amendment 98, in clause17,page50,line48,at end insert—
‘( ) The Authority must issue revised rules if—
(a) guidance is issued under section 144ZC, and
(b) the Authority, having regard to that guidance, considers that it is appropriate to revise the rules.’.
Amendment 34, in clause17,page51,line20,leave out from ‘rules’ to end of line 21.
Amendment 35, in clause17,page51,line32,at end insert—
‘( ) This section is subject to section 144ZBA.
144ZBARules under section 144ZA: minor or urgent revisions
(1) This section applies if the Authority proposes to issue revised rules under section 144ZA and, in the view of the Authority, the revision or each of the revisions proposed to be made is—
(a) a revision for which consultation is unnecessary, or
(b) a revision that it is necessary or desirable to make without delay.
(2) Section 144ZB does not apply to the proposed revised rules.
(3) Before issuing the revised rules, the Authority must give notice to the Minister of its intention to issue revised rules.
(4) Before the revised rules are issued, the Minister may direct the Authority not to issue the revised rules.
(5) A direction under subsection (4) must be given within the period of 14 days beginning with the day after the day on which notice is given under subsection (3), and the Authority may not issue the revised rules in question before—
(a) that period of 14 days expires, or
(b) the Minister notifies the Authority that no direction under subsection (4) will be given in relation to the revised rules,
whichever is the sooner.
(6) Once the Authority has issued the revised rules, it must give notice as soon as reasonably practicable of—
(a) the issuing of the revised rules, and
(b) as regards each revision contained in them, whether in the view of the Authority the revision falls within paragraph (a) or (b) of subsection (1).
(7) Notice under subsection (6) is to be given to such persons as the Authority considers appropriate.
(8) Unless the Authority gives notice that a revision in revised rules is in the view of the Authority a revision falling within subsection (1)(a), the revision ceases to have effect at the end of the period of six months beginning with the day after that on which the revised rules are issued.
(9) In this section “the Minister” has the meaning given by section 144ZB.’.—(Dan Rogerson.)

Clause 17, as amended, ordered to stand part of the Bill.

Clause 18  - Charges for providing a water main etc

Question proposed, That the clause stand part of the Bill.

Dan Rogerson: Clause 18 amends sections of the Water Industry Act 1991 that set out the charging regimes under which customers and developers have to pay for new water mains, connections to the public water supply and so on. Schedule 7 makes further amendments to repeal the remaining redundant detailed charging provisions in the 1991 Act. The effect of the clause is to remove the piecemeal provision in the Act on the various charges involved and to bring each charge within charging rules, as provided for by clause 17. That will help customers and developers by providing additional clarity on what charges can be imposed for these works, allowing them to have greater understanding of the potential costs before starting on a site. It should also help to limit disputes by providing more transparency than exists at present.

Question put and agreed to.

Clause 18 accordingly ordered to stand part of the Bill.

Clause 19  - Charges for providing a public sewer etc

Amendment made: 36, in clause19,page54,line39,leave out from ‘after’ to end of line 40 and insert ‘“expenses incurred by it in” there is inserted “, or charges imposed by it for,”.’.—(Dan Rogerson.)

Clause 19, as amended, ordered to stand part of the Bill.

Clause 20  - Charges for moving pipes

Question proposed, That the clause stand part of the Bill.

Dan Rogerson: The clause amends section 185(5) of the Water Industry Act 1991. The change will provide clarity on what charges an incumbent water company can impose in relation to its duty to move pipes and apparatus in certain circumstances. Section 185 allows a person to request that an incumbent water company alter or remove pipes or apparatus running through his land if the position of the pipes or apparatus would prevent improvement to the land.
Section 185(5) currently allows water companies to impose on the person requiring the work such costs as are reasonably incurred in carrying out the work. There is currently a lack of clarity around what expenses are “reasonably incurred” and how such reasonable expenses are calculated. This change will allow the charges to be included within charging rules to be made under clause 17, bringing transparency and consistency for developers.

Thomas Docherty: Will the Minister clarify what representations the Government have had from the various bodies? The clause particularly affects landowners. Has he had a chance to discuss it with the CLA or the NFU, and are they satisfied with the provisions he is setting out?

Dan Rogerson: I have not personally discussed this in my few months in office. However, we have discussed widely on the provisions we have sought to include in the Bill—the tidying-up procedures as well as the fundamentals that we have been debating—and all organisations have had the opportunity to contribute to those consultations.

Question put and agreed to.

Clause 20 accordingly ordered to stand part of the Bill.

Clause 21  -  Drainage systems relieving public sewers

Dan Rogerson: I beg to move amendment 143, in clause21,page55,leave out line 26.
The amendment will remove part of the new section 114A that clause 21 would insert into the Water Industry Act 1991, to ensure that land used by an incumbent water company to construct a sustainable drainage system will become subject to the protected land provisions of the 1991 Act. That allows Ofwat to regulate the disposal of land to ensure that the consumer benefits.

Amendment 143 agreed to.

Clause 21, as amended, ordered to stand part of the Bill.

Clause 22  - Primary duty to secure resilience

Question proposed, That the clause stand part of the Bill.

Dan Rogerson: The water White Paper that we published in 2011 articulated a powerful case for planning now to protect the resilience of our future water supplies. That message was underscored by the events of last year. In 2012 there was flooding on one day out of five, and drought on one day out of four. There were 6,000 flood warnings and alerts, and hosepipe bans affected more than 20 million people. We need to take account of the impact of environmental pressures, population growth and patterns of demand on essential services; to reduce pressure on the water environment that we all rely on; and to reform the aspects of the system that institutionalise short-term thinking, focusing instead on long-term resilience.
To support the required change in behaviour, the clause creates a new primary duty to further the resilience objective. It has been given wide scope, to recognise the fact that water resources are managed in the natural environment and to reflect the need for innovative solutions, demand management and planning and investment that look to the long term.
I know some hon. Members feel that those objectives would be best served by changing the order of Ofwat’s existing duties to make sustainable development a primary duty. We shall have the opportunity to debate that at some length later, but I want to mention now that I strongly support the objective of securing that environmental guarantee and resilience.
Ofwat currently has a duty to take into account sustainable development.

Roger Williams: I am pleased to hear the Minister make that commitment to sustainable development in Ofwat’s remit. I am sure that he will elaborate if we have the chance to debate some of the new clauses.

Dan Rogerson: I know that my hon. Friend cares about the issue, and the new clauses that he has tabled are evidence of that.
Clause 22 is focused on resilience, and I hope that the House will support that. The resilience duty has been created to address the specific duties to do with long-term pressures on the industry. Its scope has been made sufficiently broad to allow it to encompass all the activities that water companies can undertake to manage the pressures, including investing in additional water storage, which I know many members of the Committee are keen on; tackling unsustainable abstraction, a huge concern that has already been raised in Committee; and focusing on environmental management across the catchment.
It is my belief that the new duty of resilience addresses precisely the legitimate concerns that Members have raised about the long-term pressures on our water and sewerage services and the water environment on which they rely. I look forward to hearing more debate about such issues later in Committee, but the new duty of resilience that we are discussing is important. I commend the clause to the Committee.

Thomas Docherty: We welcome clause 22 and do not intend to oppose it. However, the Minister will know that we have genuine concerns, and I refer him again to the work of the Select Committee. I know that we do not often discuss the south-west region in this Committee, so let me quote what South West Water said to the Select Committee:
“Currently, an element of capacity is built into the network to accommodate peaks in flows or to ensure continuity of service where an aspect of the system fails. However, in a ‘competitive’ environment, where new entrants will be competing to provide resources and assets at the most efficient cost, it is not yet clear how these critical capacity safety nets will be maintained.”
We also heard evidence from organisations such as Wessex Water and the Local Government Association, and from many other stakeholders.
One unfortunate reality of the British climate is that we veer from droughts to floods. We have heard previously in Committee eloquent speeches about hosepipe bans; in the same regions, six months later, there can be flooding on the catastrophic scale we saw just a couple of days ago. Although we do not intend to oppose the clause, I hope that the Minister will set out how he is ensuring that the serious concerns raised by the witnesses, the Select Committee and the Opposition will be addressed. After all, it is in no one’s interest that we see more flooding on the scale we have recently seen.

Dan Rogerson: The hon. Gentleman makes some important points. I welcome the fact that he and his colleagues are supportive of reforming and increasing the duties to examine longer-term issues. I am pleased that he sees the need for that.
We want to see better management of water resources. The resilience duty will potentially cover a range of considerations about how water is managed, and that might involve storage. As the hon. Gentleman said, and as my right hon. Friend the Secretary of State said on Second Reading, in some areas, a lot of water comes down and that is a problem; if we were able to capture, harvest and use some of that water at times of shortage, we would have a much more resilient system.

Roger Williams: Everyone supports the idea of resilience, but the question is about the balance between large capital expenditure and managing water demand, ensuring that we look after our water as it is transferred from the reservoir to the consumer.

Dan Rogerson: That is why I welcomed the evidence from the Environment Agency about the important role it has to play in managing resources and the powers it has at its disposal to do so. We discussed issues such as abstraction when debating a previous group of amendments.
I believe that by introducing a duty of resilience we will put in place another piece of the puzzle that will allow us to look after resources. It will ensure that when Ofwat looks at how companies behave and their business plans it takes into account their plans to invest to ensure that resources are there for the future. The duty of resilience will also require companies to look at environmental considerations. To ensure security of supply, the environmental considerations are aligned with the fact that water is a limited resource in some catchments. It is a win-win scenario.
In evidence we heard some people express concerns about whether we have got the balance of the duty right. I am happy to listen to those arguments. When we debate the new clauses that the hon. Member for Dunfermline and West Fife and my hon. Friend the Member for Brecon and Radnorshire have tabled, we can look again at that issue to ensure that we have the balance right.

Thomas Docherty: The Minister and Members who had the pleasure of serving with him on the Select Committee on Environment, Food and Rural Affairs will recall that the Select Committee’s central conclusion on the issue of resilience was:
“We recommend that Defra revisit this issue, inviting evidence from water companies, consumer representatives and other interested parties both on the likely impact of the reforms and on the detail of their implementation.”
Before the Minister finishes, will he clarify how many meetings he has had on that issue since taking up his post?

Dan Rogerson: I have had a number of meetings with different organisations. I have met with Ofwat and water companies, and I have heard from NGOs about their concerns. The benefit of the current system, unlike the old Standing Committee system for public Bills, is that what people said in the evidence sessions is on the record. I do not think their views have changed greatly from what they said to the Select Committee or in previous consultations.
Following on from what the Select Committee said, we have looked at the resilience duty closely. We have made some changes to the upstream package, for example, which I know the hon. Gentleman is concerned about. I know that he treasures the Select Committee reports and takes copies of them to bed with him every night. They seem to be his most prized possessions, and I look forward to hearing a great deal more from them.
In conclusion, I welcome the fact that Members from both sides of the House see the need for the new duty of resilience and recognise the benefits it can bring. I look forward to debating duties more generally at a later stage.

Question put and agreed to.

Clause 22 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned.— (John Penrose.)

Adjourned till this day at half-past One o’clock.
Written evidence reported to the House
WB 12 Ewan Larcombe
WB 13 Water Industry Commission for Scotland
WB 14 Lucy Borland
WB 15 John Copley, Head of Environmental Development, Oxford City Council
WB 16 Adaptation Sub-Committee of Committee on Climate Change
WB 17 Ofwat
WB 18 Water Liaison Group